## 2.3 Indigenous Governments ## Source details **Canonical URL:** [2.3 Indigenous Governments](https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/gfsm-discussion-note-23-indigenous-governments.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/gfsm/global-consultations/gfsm-discussion-note-23-indigenous-governments.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/gfsm/global-consultations/gfsm-discussion-note-23-indigenous-governments.pdf.json) --- ### Summary and purpose - The Discussion Note (DN) addresses gaps in the Government Finance Statistics Manual (GFSM) regarding classification and treatment of self-governing Indigenous entities. - Proposes guidance to classify Indigenous entities as government units based on two indicators: - Formal Recognition of Authority: formal recognition through the constitution, local laws, or legally binding agreements as exercising authority over other Indigenous institutional units. - Self-governing: capacity to determine at least some expenditure priorities and to select governing authorities without those authorities being appointed or imposed by another government unit. - Recommends keeping existing control criteria for non-profit institutions unchanged. - Advises against imposing a specific subsector approach; instead encourages transparent reporting of Indigenous government activities through “of which” categories within existing subsectors of general government. - Annex 1 provides summary information on Indigenous government arrangements within select countries to support analysis. ### Context and statistical significance - Indigenous peoples are recognized in United Nations documents as distinct communities with ancestral ties to specific territories and unique governance practices; the International Working Group on Indigenous Affairs (IWGIA) emphasizes robust protection of political rights. - Many self-governing Indigenous entities may meet the conceptual definition of a government unit, but lack of clear guidance produces uncertainty about classification within statistical frameworks and whether such entities belong to general government. - Paragraph 31.19 of the 2025 SNA notes these organizations are likely to occupy “a grey area between the non-profit sector and either the corporations or general government sectors.” - In national accounts the Total Economy includes these entities regardless of subsector allocation; in the GFSM classification directly affects the delineation of the public sector and the fiscal perimeter. - The GFSM public sector decision tree (GFSM 2014, paragraph 2.124 and Figure 2.4) sequentially evaluates residence; institutional unit status; control by government; and market or nonmarket status. Applying this decision tree often classifies Indigenous organizations as Non-Profit Institutions Serving Households (NPISH) because government control criteria (GFSM 2014, Box 2.1) are not clearly met despite many Indigenous organizations exhibiting government-like characteristics. - DN identifies a further grey area: if an Indigenous organization is treated as a government unit because it is nonmarket and financially dependent on another government unit, GFSM 2014 (paragraph 2.83) would assign it to the subsector of the controlling unit (potentially central government), which can conflict with treatment of conventional local governments (GFSM 2014, paragraph 2.95). ### Three central classification issues examined - Issue A — Preliminary criteria to identify when an Indigenous organization may be considered a self-government unit before applying the GFSM public sector decision tree. - Issue B — Assessment of possible revision of the control indicators used in classification (GFSM 2014, Box 2.1) to capture cases where Indigenous organizations do not fully meet autonomous government requirements but exhibit government-like characteristics. - Issue C — Subsectors: whether Indigenous governments should constitute a distinct level of government (analogous to state or local) or be incorporated into existing government levels (central, state, local), including sectorization challenges when Indigenous jurisdictional boundaries do not align with conventional boundaries. ### Issue A — Proposed operational criteria for inclusion in General Government - Anchor operational definition in existing statistical framework: 2025 SNA paragraphs 3.17, 5.6, 30.35; GFSM 2014 paragraphs 2.30, 2.58, 2.124. - Institutional unit requirements: meet criteria in 2025 SNA paragraphs 5.2, 3.16 and GFSM 2014 paragraph 2.22 on ownership of assets, incurrence of liabilities, decision-making capacity, and ability to compile a complete set of accounts if required. - GFSM 2014 paragraph 2.38 cited in full as the definitional basis for government units (verbatim excerpt included in DN). - Two operational indicators recommended: - Formal recognition of public authority through constitution, local legislation, or legally binding agreements conferring legislative, executive, or judicial authority over other institutional units. - Self-government: ability to select governing authorities and decide on use of at least some resources on the organization’s own initiative; GFSM 2014 paragraph 2.95 cited to illustrate locality/agency principle for local governments. ### Practical and conceptual considerations - Customary or traditional selection of leaders and community-based decision-making can evidence self-government for GFSM purposes if they indicate public authority over other institutional units. - Country variation across: - legal basis of recognition (constitutional, treaty, statutory, customary); - degree of autonomy (advisory to fully self-governing with courts and police); - functional scope (land governance, service delivery, justice administration, ceremonial roles); - structural relationship with the state (co-equal partners, nested sovereigns, consultative bodies); - implementation gap between rights on paper and rights in practice. - For GFSM purposes what matters is whether these features evidence public authority over other institutional units, not merely cultural or community recognition. ### Empirical mapping (stylized indicators) - Stylized mapping of Indicator responses (extracted from Table 1) across cases and country examples (Canada, USA, South Africa, Guatemala, Brazil, Nicaragua, Bolivia): - Formal Recognition to exercise authority: Yes, No, Yes, Yes, Yes, No, No, Yes, Yes (presented in that specific order corresponding to the table). - Self-governing: Yes, Yes, Yes, Yes, Yes, Yes, Yes, Yes, Yes (presented in that specific order corresponding to the table). - Cautions: - Responses reflect initial findings and may require further country-specific analysis. - Research team limitations: not specialists in Indigenous affairs; some responses draw on legal provisions and studies related to specific Indigenous organizations and are not representative of all Indigenous organizations within a country. - Analysis constrained by significant challenges in collecting consistent and comprehensive data. ### Draft recommendations and approaches (Issue A) - Use two operational indicators to identify Indigenous governments for GFSM classification: - Formal recognition of public authority. - Evidence of self-government (capacity to select governing authorities and determine at least some expenditure priorities independently). - Maintain existing government control criteria for non-profit institutions (do not expand control criteria) but provide preliminary criteria (above) to apply before the public sector decision tree. - Encourage transparent reporting of Indigenous government activities through “of which” breakdowns within existing subsectors of general government. - Recognize that inclusion in general government yields substantive fiscal perimeter and fiscal-aggregate implications and requires clear, transparent treatment. ### Issue B — Control indicators applicable to Indigenous organizations - Box 2.1 five main indicators of government control over a nonprofit institution (NPI) remain the operational basis: - (i) the appointment of officers; - (ii) other provisions of the enabling instrument that allow government to determine significant aspects of the entity’s general policy, functions, or objectives, or to remove key personnel or veto proposed appointments; - (iii) contractual agreements that allow government to determine key aspects of the entity’s policy or program; - (iv) the degree of financing by government; - (v) the extent to which government bears the financial risks associated with the entity’s activities. - Additional control considerations especially relevant to Indigenous organizations include: - Whether authority is exercisable by the entity itself or is delegated and revocable by another government unit. - Whether conventional governments can unilaterally extinguish, suspend, replace leaders, annul acts, or redefine powers. - Mismatch between formal recognition and effective authority in practice. - Whether conventional government can influence binding decisions on land, water, subsoil assets, forests, or fisheries. - Options considered: - Option B1: Maintain Status Quo (retain Box 2.1 unchanged). - Option B2: Complement Box 2.1 with additional indicators addressing delegation/revocability, unilateral termination, mismatch between legal recognition and effective authority, and binding influence over natural-resource decisions. - Draft recommendation: - Recommend Option B1 (Maintain the status quo). Clarifications under Issue A expected to resolve most cases; existing Box 2.1 indicators provide a sufficient operational basis without adding complexity. ### Issue C — Subsectors and presentation within general government - GFSM 2014 subsector definitions to determine placement: - Central government: units exercising authority over the entire economic territory of a country (GFSM 2014, paragraph 2.85). - State governments: units exercising some functions of government at a level below central and above local (GFSM 2014, paragraph 2.90). - Local government units: institutional units whose authority extends over the smallest geographical areas into which the country is administratively divided (GFSM 2014, paragraph 2.95). - Practical complexities: - Indigenous government units may not form part of conventional budgetary governments and may be extrabudgetary. - Jurisdictions may overlap conventional administrative boundaries or cross multiple local/state governments. - Creating a distinct subsector would depart from current GFSM presentation and must be weighed against international comparability, consistency with other macro frameworks, and compilation costs. ### Options for subsector classification and analytical trade-offs - Option C1: Maintain Status Quo — classify according to current principles; flexibility to record as budgetary or extrabudgetary units within existing subsectors. - Option C2: Classify within an existing government subsector (local or state) - Benefits: minimal structural change; aligns Indigenous governments with subnational governments where functions are similar. - Limitations: may misrepresent cases effectively under central control; does not standardize budgetary/extrabudgetary distinction; may not capture overlapping jurisdictions or provide separate visibility. - Option C3: Classify as extrabudgetary units of an existing subsector (central, state, or local) - Benefits: recognizes government-unit status and nonbudgetary operations; flexible classification. - Limitations: consolidates Indigenous units with other extrabudgetary units; visibility remains incomplete; potential heterogeneous national classifications. - Option C4: Create a new subsector dedicated to Indigenous governments - Benefits: highest visibility; explicit recognition of distinct institutional, legal, and jurisdictional characteristics. - Limitations: departs from three-level GFSM structure; cross-country comparability issues; potential significant implementation costs; political sensitivity. - Option C5: Maintain status quo with a recommended “of which” analytical breakdown for Indigenous governments - Benefits: preserves international comparability; enhances national visibility and transparency where relevant; low implementation burden relative to creating a new subsector; flexible for diverse country arrangements. - Limitations: does not fully resolve conceptual sectorization issues; potential heterogeneous national presentations; international comparability of Indigenous-specific data limited if not collected consistently. ### Draft recommendation and governance feedback (Issue C) - Task team draft recommendation: Option C5 (Maintain the status quo with a recommended “of which” analytical breakdown for Indigenous governments). - Rationale: preserves GFSM sectorization framework and comparability while providing a practical mechanism to enhance visibility where relevant and feasible; subsector classification continues to follow existing GFSM principles. - Preliminary GFSAC views (May 2026): broad support for Issues A and B recommendations; differing views on sectorization under Issue C. Requests for clearer SNA references, a more precise definition of Indigenous governments, and further discussion of sectorization options including an “of which” presentation are reflected in the updated DN. ### Consultation questions posed for global input - Which option do you prefer (Option A1; Option A2)? Please explain reasons and propose alternatives if any. - Do the proposed indicators adequately capture the defining features of Indigenous governments? - Which option do you prefer (Option B1; Option B2)? Please explain reasons and propose alternatives if any. - Which option do you prefer (Option C1; Option C2; Option C3; Option C4; Option C5)? Please explain reasons and propose alternatives if any. - Are there additional criteria or considerations relevant for statistical classification of Indigenous governments? - Are you aware of potential risks or concerns associated with statistical recognition of Indigenous governments? ### Illustrative country experience (annex highlights) - United States: - Self-governance typically formalized through compacts or agreements negotiated between the tribe and a federal agency, such as the Indian Health Service (IHS). - Under negotiated self-governance agreements tribes assume full funding, control and accountability for the programs they choose to manage. - Mexico: - Funding for Indigenous governance shifting from State-led agencies to direct management by communities (example: Pichátaro in 2015 won legal rights to manage a proportional share of public funds directly). - International funding example: Mexico Dedicated Grant Mechanism (DGM) funded by World Bank providing millions (e.g., a $6 million grant) to strengthen capacity of forest-dependent Indigenous peoples. - Canada: - Definition: Indigenous peoples comprise First Nations, Inuit, and Métis as recognized in the Canadian Constitution. - There are 25 self-government agreements across Canada involving 43 Indigenous communities and two education agreements involving 35 Indigenous communities. - Most First Nations remain governed by the Indian Act unless they have negotiated self-government; negotiated agreements transfer decision-making power and can cover governance, social and economic development, education, health, lands and more. - Fiscal arrangements under Canada’s collaborative self-government fiscal policy generally have a 5-year term and include financial transfer agreements, fiscal financing agreements, or fiscal relationship agreements. - Nicaragua: - 1987 Constitution and Law No. 28/2016 (Statute of Autonomy of the Regions of the Caribbean Coast) establish North Caribbean Coast Autonomous Region and South Caribbean Coast Autonomous Region and define Autonomous Regions as public-law legal entities (Article 8 of Law No. 28). - Law No. 445/2003 (Communal Property Regime) recognizes collective ownership rights over ancestral lands; communal assembly elects communal authorities; principal authorities include the wihta (communal judge) and the síndico (administration of land and natural resources). - South Africa: - Chapter 12 of the Constitution recognizes traditional leaders; national legislation may provide roles for traditional leadership at local level and establish houses of traditional leaders or a council of traditional leaders. - Functional and fiscal aspects: municipalities bear primary obligation to fund service and development, while traditional leaders may be allocated funds for maintenance of properties, personnel, and infrastructure; questions remain on subsector placement and availability of financial statements. - Comparative context: - Bolivia (2009), Ecuador (2008), Greenland (Denmark, 2009) and other jurisdictions provide constitutional recognition and varying degrees of self-government; Norway, Sweden, Finland utilize Saami Parliaments. ### Supporting materials and limitations - Annex 1 supplies summary information on Indigenous government arrangements within select countries and is used as background evidence. - DN acknowledges limitations: constrained data collection, non-exhaustive country coverage, and need for further country-specific analysis. *Source: Discussion Note prepared by the GFS Compilation Task Team (TT1); Authors: Bocar Ka, Artur Santos, Carlos Herrera.* ### 2.3 Indigenous Governments ### 2.3 Indigenous Governments ### Summary and purpose - The Discussion Note (DN) addresses gaps in the Government Finance Statistics Manual (GFSM) regarding the classification and treatment of self-governing Indigenous entities. - The DN proposes guidance to classify Indigenous entities as government units based on two indicators: - Formal Recognition of Authority: Whether the Indigenous organization is formally recognized (through the constitution, local laws, or legally binding agreements) as exercising authority over other Indigenous institutional units. - Self-governing: Whether the Indigenous organization has the capacity to determine its own expenditure priorities and to select its own governing authorities, without those authorities being appointed or imposed by another government unit. - The DN considers whether existing control criteria for non-profit institutions need expansion for Indigenous organizations and recommends keeping them unchanged. - The DN examines several options for subsector classification of Indigenous government units and recommends not imposing a specific subsector approach; instead it encourages countries to transparently report activities of Indigenous governments through “of which” categories within existing subsectors of general government. - Annex 1 provides summary information on Indigenous government arrangements within select countries to support the analysis. ### Context and statistical significance - Indigenous peoples are recognized in United Nations documents as distinct communities with ancestral ties to specific territories and unique governance practices; the International Working Group on Indigenous Affairs (IWGIA) emphasizes robust protection of political rights for genuine empowerment, equality, and secure access to land and natural resources. - Within macroeconomic statistics, many self-governing Indigenous entities may meet the conceptual definition of a government unit, but there is no clear guidance on classification within existing statistical frameworks, producing uncertainty about whether such entities should be treated as part of general government or classified outside conventional government structures. - Paragraph 31.19 of the 2025 SNA notes these organizations are likely to occupy “a grey area between the non-profit sector and either the corporations or general government sectors.” The 2025 SNA characterization does not provide practical resolution guidance. - In national accounts the Total Economy includes these entities regardless of subsector allocation; in the GFSM the classification directly affects the delineation of the public sector and the fiscal perimeter. Inclusion within the public sector brings additional economic operations into fiscal aggregates and the measurement of government activities. - The GFSM public sector decision tree (GFSM 2014, paragraph 2.124 and Figure 2.4) sequentially evaluates: (1) residence; (2) whether the unit is an institutional unit; (3) control by government; and (4) market or nonmarket status. Applying this decision tree often classifies Indigenous organizations as Non-Profit Institutions Serving Households (NPISH) because the government control criteria (GFSM 2014, Box 2.1) are not clearly met, despite many Indigenous organizations exhibiting characteristics of government units (GFSM 2014, paragraph 2.38). - The DN identifies a further grey area: if an Indigenous organization is treated as a government unit because it is nonmarket and financially dependent on another government unit, GFSM 2014 (paragraph 2.83) would assign it to the subsector of the controlling unit (potentially central government). That outcome can conflict with treatment of conventional local governments, which are also heavily grant dependent (GFSM 2014, paragraph 2.95) but are not classified solely by financial dependence. ### Three central classification issues examined - Issue A — Preliminary criteria to identify when an Indigenous organization may be considered a self-government unit before applying the GFSM public sector decision tree. - Issue B — Assessment of possible revision of the control indicators used in classification (GFSM 2014, Box 2.1) to capture cases where Indigenous organizations do not fully meet autonomous government requirements but exhibit government-like characteristics. - Issue C — Subsectors: whether Indigenous governments should constitute a distinct level of government (analogous to state or local) or be incorporated into existing government levels (central, state, local), including sectorization challenges when Indigenous jurisdictional boundaries do not align with conventional boundaries. ### Issue A — Proposed operational criteria for inclusion in General Government - For statistical identification, the DN recommends anchoring any operational definition of “Indigenous Government” in the existing statistical framework for identifying government units (2025 SNA paragraphs 3.17, 5.6, 30.35; GFSM 2014 paragraphs 2.30, 2.58, 2.124). - An organization must be an institutional unit meeting criteria in 2025 SNA paragraphs 5.2, 3.16 and GFSM 2014 paragraph 2.22 on ownership of assets, incurrence of liabilities, decision-making capacity, and ability to compile a complete set of accounts if required. - GFSM 2014 paragraph 2.38 defines government units; the DN cites the paragraph verbatim to support formal-recognition and functional criteria. The paragraph states in full: - “2.38 Government units are unique kinds of legal entities established by political processes that have legislative, judicial, or executive authority over other institutional units within a given area. The principal economic functions of government units are to: • Assume responsibility for the provision of goods and services to the community or individual households primarily on a nonmarket basis; • Redistribute income and wealth by means of transfers; • Engage primarily in nonmarket production; • Finance their activities primarily out of taxation or other compulsory transfers. A government unit may also finance a portion of its activities in a specific period by borrowing or by acquiring funds from sources other than compulsory transfers—for example, interest revenue, incidental sales of goods and services, or the rent of subsoil assets. All government units are part of the general government sector.” - Formal recognition is proposed as an operational indicator of political process: official acknowledgement through a constitution, local legislation, or legally binding agreements that confers legislative, executive, or judicial authority over other institutional units. - Self-government is proposed as an additional indicator: ability to select governing authorities and decide on the use of at least some resources on the organization’s own initiative, with GFSM 2014 paragraph 2.95 cited to illustrate the locality/agency principle for local governments (appointment of officers independently of external administrative control; ability to raise and spend some funds on own initiative). ### Practical and conceptual considerations - The DN notes customary or traditional selection of leaders and community-based decision-making may differ from conventional electoral or budgetary processes; these forms of governance can nevertheless evidence self-government for GFSM purposes if they indicate public authority over other institutional units. - Country variation is substantial across: - legal basis of recognition (constitutional, treaty, statutory, customary); - degree of autonomy (advisory to fully self-governing with courts and police); - functional scope (land governance, service delivery, justice administration, ceremonial roles); - structural relationship with the state (co-equal partners, nested sovereigns, consultative bodies); - implementation gap between rights on paper and rights in practice. - For GFSM purposes, what matters is whether these features evidence public authority over other institutional units, not merely cultural or community recognition. ### Empirical mapping (Table 1 — summary of indicators) - The DN provides a stylized mapping of Indicator responses (extracted from Table 1): - Indicators across stylized cases and country examples (Canada, USA, South Africa, Guatemala, Brazil, Nicaragua, Bolivia): - Formal Recognition to exercise authority: Yes, No, Yes, Yes, Yes, No, No, Yes, Yes (presented in that specific order corresponding to the table). - Self-governing: Yes, Yes, Yes, Yes, Yes, Yes, Yes, Yes, Yes (presented in that specific order corresponding to the table). - The DN cautions the mapping: - The responses reflect initial findings and may require further country-specific analysis. - The research team does not specialize in Indigenous affairs; results may be subject to limitations. - Some responses draw on legal provisions and country studies related to specific Indigenous organizations and are not representative of all Indigenous organizations within a country. - The analysis was constrained by significant challenges in collecting consistent and comprehensive data. ### Draft recommendations and approaches - Use two operational indicators to identify Indigenous governments for GFSM classification: - Formal recognition of public authority (constitution, local laws, or legally binding agreements). - Evidence of self-government (capacity to select governing authorities and determine at least some expenditure priorities independently). - Maintain existing government control criteria for non-profit institutions (i.e., do not expand control criteria) but provide preliminary criteria (above) to apply before the public sector decision tree. - Do not mandate a single subsector approach for Indigenous government subsector classification; instead, encourage transparent reporting of Indigenous government activities through “of which” breakdowns within existing subsectors of general government. - Recognize that inclusion in general government yields substantive fiscal perimeter and fiscal-aggregate implications and therefore requires clear, transparent treatment. ### Supporting materials and limitations - Annex 1 supplies summary information on Indigenous government arrangements within select countries; the DN uses Annex 1 as background evidence but notes data limitations and the need for further country-specific analysis. - The DN acknowledges limitations in the mapping and in the research process, including constrained data collection and non-exhaustive country coverage. *Source: Discussion Note prepared by the GFS Compilation Task Team (TT1); Authors: Bocar Ka, Artur Santos, Carlos Herrera.* ### 21. In the United States case, self-governance is typically formalized through compacts or ### gfsm-discussion-note-23-indigenous-governments - 21. In the United States case, self-governance is typically formalized through compacts or ### Background and key findings on Indigenous governance and fiscal treatment - Self-governance arrangements in the United States are typically formalized through compacts or agreements negotiated between the tribe and a federal agency, such as the Indian Health Service (IHS). - Under negotiated self-governance agreements, tribes assume full funding, control and accountability for the programs they choose to manage. - In Mexico, funding for Indigenous governance is shifting from State-led agencies to direct management by the communities themselves (Dozens of communities, starting with Pichátaro in 2015, have won legal rights to manage a proportional share of public funds directly). - International, multilateral, NGO, and philanthropic funding examples include the Mexico Dedicated Grant Mechanism (DGM), funded by World Bank, providing millions (e.g., a $6 million grant) to strengthen the capacity of forest-dependent Indigenous peoples. - The treatment of Indigenous communities within macroeconomic statistics needs to consider institutional and legal organization as well as funding arrangements. ### Issue A — Identification and classification of Indigenous governments (options and guidance) - Options identified: - Option A1: Maintain Status Quo - Keeps current approach; Indigenous entities classified under existing general rules without specific criteria. - Preserves continuity but does not resolve uncertainties or inconsistencies across countries. - Option A2: Incorporate Indicator Guidance to Classify Indigenous Governments as part of General Government - Introduces structured approach: confirm entity is an Indigenous community and an institutional unit. - Definition of Indigenous community: "a population that descends from pre-colonial or pre-establishment communities who are regarded as Indigenous because of their descent and who maintain some or all of their own social, economic, cultural and political institutions." - Two indicators to assess classification: - Indicator 1 – Formal Recognition of Authority: Does the Indigenous organization have formal recognition established through political or administrative processes, such as the constitution, local laws, or legally binding agreements, to exercise legislative, judicial, or executive authority over other institutional units and does such recognition correspond to effective authority in practice? - Yes: Indicates a high likelihood of being a government unit. - No: Not classified as a distinct government unit, unless there is strong evidence of well-established authority over other units or the entity is controlled by another public sector unit. - Indicator 2 – Self-governing: Does the Indigenous organization have the capacity to determine its own expenditure priorities and to select its own governing authorities, without those authorities being appointed or imposed by another government unit? - Yes: Indicates existence of a self-government arrangement. - No: Suggests the organization is more likely to be treated as part of the government unit that exercises control over it. - Guidance to be included in Chapter 2 of the GFSM to be applied alongside the public sector decision tree. - Implementation implications: adapting national data systems, varied legal and institutional contexts, potential effects on time series comparability; overall impact expected to be small but country-specific. - Table 2. Summary of Classification Outcomes Based on Indicator Assessment (applies only after entity confirmed as institutional unit): - Indicator 1: Yes; Indicator 2: Yes → Classified as distinct unit within general government - Indicator 1: Yes; Indicator 2: No → To be classified based on application of the public sector control criteria (see Issue B) - Indicator 1: No; Indicator 2: Yes → Unlikely to be a distinct unit within general government unless (i) there is strong evidence of entity exerting a well-established (but not legally-established) legislative, judicial, or executive authority over other institutional units, OR (ii) is found to be under the control of another public sector unit. - Indicator 1: No; Indicator 2: No → To be classified based on application of the public sector control criteria (see Issue B) - Draft recommendation: - The task team recommends updating GFSM guidance by adopting Option A2 (Incorporation of indicator based guidance) to improve clarity in classifying Indigenous governments as part of General Government. The introduction of clear criteria and guidance is expected to enhance coherence, coverage, and visibility of Indigenous fiscal activities. ### Issue B — Indicators of control applicable to Indigenous organizations - Background and problem: - If not classified as Indigenous government under Issue A, the institutional unit must be assessed under the public sector decision tree in GFSM 2014. - Existing Box 2.1 indicators on government control of nonprofit institutions (NPIs) may not fully capture institutional particularities of Indigenous organizations, which often arise from different institutional logics and may possess historically rooted, territorially specific authority. - Box 2.1 five main indicators of government control over an NPI: - (i) the appointment of officers; - (ii) other provisions of the enabling instrument that allow government to determine significant aspects of the entity’s general policy, functions, or objectives, or to remove key personnel or veto proposed appointments; - (iii) contractual agreements that allow government to determine key aspects of the entity’s policy or program; - (iv) the degree of financing by government; - (v) the extent to which government bears the financial risks associated with the entity’s activities. - Additional control considerations especially relevant to Indigenous organizations: - Whether the entity exercises public authority of its own or merely authority delegated and revocable by another government unit. - Whether central, state or local government can unilaterally extinguish, suspend, replace its leaders, annul its acts, or redefine its powers. - Whether formal recognition exists only in a nominal sense while material authority is constrained by the conventional government. - Whether the conventional government can influence management or decide, authorize, veto, or participate in a binding way in decisions concerning land, water, subsoil assets, forests, or fisheries. - Options identified: - Option B1: Maintain Status Quo - Continue applying current Box 2.1 indicators without modification. - Advantage: relies on well-established criteria familiar to compilers. - Drawback: may not capture institutional particularities of Indigenous organizations. - Option B2: Complement Box 2.1 with additional indicators applicable to Indigenous governments - Retain Box 2.1 and add supplementary indicators addressing delegation/revocability of authority, unilateral termination or replacement by another government, mismatch between legal recognition and effective authority, and binding influence over decisions on land/water/subsoil/forests/fisheries. - Advantage: better reflect institutional diversity and forms of control; improve analytical clarity. - Drawbacks: added complexity, additional information and compilation effort, many indicators could also apply to conventional subnational governments so marginal added value is debatable. - Draft recommendation: - The research team recommends Option B1 (Maintain the status quo). Clarifications under Issue A are expected to resolve most classification cases. For remaining entities, existing Box 2.1 indicators provide a sufficient operational basis without adding complexity, particularly where financial dependence on another government unit is present. ### Issue C — Subsector classification within general government - Background and issues: - Once an Indigenous organization is identified as a government unit, subsector classification (central, state, local) must be determined in light of Issues A and B. - GFSM 2014 definitions: - Central government: units exercising authority over the entire economic territory of a country (GFSM 2014, paragraph 2.85). - State governments: units exercising some functions of government at a level below central and above local, where country may be divided into such jurisdictions (GFSM 2014, paragraph 2.90). - Local government units: institutional units whose authority extends over the smallest geographical areas into which the country is administratively divided (GFSM 2014, paragraph 2.95). - General expectation: Indigenous government units would generally be classified at the local government level, but institutional and jurisdictional nuances may apply. - Paragraphs 2.77 and 2.78 of GFSM 2014 allow countries discretion in presentation of subsectors while preserving broad three-level presentation for international comparability. - Practical complexities: - Many Indigenous government units may not form part of conventional budgetary governments, raising question of classification as extrabudgetary units rather than budgetary units. - Indigenous governments can exercise authority not fully contained within territorial boundaries of conventional state or local governments (e.g., federally recognized tribal governments in the United States), and jurisdictions may overlap or cross multiple local or state governments. - This raises the question of whether a distinct subsector for Indigenous governments could be analytically useful, but creating a distinct subsector would depart from current GFSM presentation and must be weighed against international comparability, consistency with other macro frameworks, and compilation costs. - Options identified (overview): - Option C1: Maintain Status Quo - No amendments to GFSM framework; Indigenous governments qualifying as government units continue to be classified within general government following current principles. - Flexibility to record them as part of an existing government subsector (central, state, local) or as extrabudgetary units of these subsectors depending on country-specific arrangements. - Preserves current GFSM architecture and avoids changes to reporting templates and compilation systems. *GFSM 2014 Update Consultation: July 2026* ### 47. This option provides flexibility to reflect cases in which Indigenous governments operate as local ### gfsm-discussion-note-23-indigenous-governments - 47. This option provides flexibility to reflect cases in which Indigenous governments operate as local ### Summary of classification options and their analytical trade-offs (Options C2–C5) - Option C2: Classification within an existing government subsector (local or state) - Indigenous governments that qualify as government units would be classified within an existing subnational government subsector, most commonly local government and, in some cases, state government. - No predetermined distinction between budgetary and extrabudgetary components; countries could apply existing practices to present units as budgetary or extrabudgetary within the relevant subsector. - Indigenous organizations not meeting Issue A indicators but controlled by central government could by convention be classified within a local or state subsector depending on jurisdiction and functions. - Benefits: - Requires minimal structural change; relies on existing GFSM subsector definitions. - Standardizes classification as part of subnational government and may improve transparency by identifying Indigenous governments as separate units within the relevant subnational subsector. - Supports comparability at the level of government closest to the population where Indigenous governments exercise similar functions to local or state governments. - Limitations: - Does not allow classification within central government even when units are effectively under central control, potentially misrepresenting governance arrangements. - Does not provide a standardized approach to distinguishing budgetary versus extrabudgetary units. - May not capture overlapping jurisdictions, operations outside conventional boundaries, or institutional features that differ from state or local governments. - Does not provide separate visibility for Indigenous governments in statistical presentation. - Option C3: Classification as extrabudgetary units of an existing government subsector (central, local or state) - Indigenous governments would be classified as extrabudgetary units within an existing government subsector—typically local or state government, or central government where units are under central control. - Recognizes Indigenous governments as government units while reflecting that many may not form part of conventional budgetary frameworks. - Benefits: - Captures economic activities within general government statistics while preserving an analytical distinction between budgetary and nonbudgetary operations. - Provides flexibility for countries to classify within central, state, or local subsectors that best reflect institutional arrangements. - May reduce political sensitivity relative to creating a dedicated subsector. - Limitations: - Records Indigenous units as part of other conventional subsectors even where they are not under control of those governments, consolidating activities with other units of the subsector. - Provides limited flexibility when Indigenous governments are integrated into budgetary arrangements. - Visibility remains incomplete because Indigenous governments are not separately distinguished from other extrabudgetary units. - Risk of heterogeneous classification across countries absent clear guidance, reducing comparability. - Option C4: Classification under a new subsector dedicated specifically to Indigenous governments - Indigenous governments would be classified within a separate subsector of general government dedicated specifically to Indigenous governments. - Relevance where Indigenous authorities have jurisdictions not contained within territorial boundaries of local or state governments, where jurisdiction overlaps multiple units, or where users require separate presentation. - Benefits: - Highest degree of visibility among options. - Enhances analytical clarity by explicitly recognizing distinct institutional, legal, and jurisdictional characteristics. - Supports international comparison where countries compile consistent data. - Facilitates analysis of fiscal role, functions, and economic impact of Indigenous governments. - Limitations and costs: - Departure from current GFSM practice; requires careful consideration to ensure consistency and comparability. - Creates a subsectoral presentation differing from the standard three-level structure of general government used in other macroeconomic statistical frameworks. - Cross-country comparability may be uneven because not all countries have Indigenous governments or collect comparable data. - Could entail significant implementation costs: adjustments to compilation systems, data collection, dissemination tables, and time series. - May raise political sensitivity as potential interpretation of political recognition rather than a statistical classification. - Option C5: Maintain the status quo with a recommended “of which” analytical breakdown for Indigenous governments - The GFSM core sectorization framework remains unchanged; Indigenous governments that qualify as government units continue to be classified within existing general government subsectors according to current principles and country-specific arrangements. - Countries would be encouraged to provide an additional analytical breakdown (for national presentation), such as “of which: Indigenous governments,” to identify Indigenous government activities within the subsector where they are classified. - Countries would be encouraged, where relevant and feasible, to submit this supplementary data to the IMF as additional data accompanying regular GFS reporting. - Benefits: - Preserves international comparability of general government subsectors and consistency with other macroeconomic statistical frameworks. - Enhances national visibility and transparency of Indigenous governments where analytically or policy relevant. - Low implementation burden relative to creating a new subsector; may require adjustments to reporting templates or dissemination tables. - Offers flexibility useful given diversity of legal, institutional, and jurisdictional arrangements across countries. - Limitations: - Does not fully resolve conceptual sectorization issues and may result in heterogeneous national presentations. - Could raise analytical concerns where units are included in central government aggregates but are not fully controlled by central policymakers. - Dependence on national relevance, data availability, and compilation capacity; some countries may need to collect additional disaggregated data. - International comparability of Indigenous government data could be limited if international databases do not collect the “of which” breakdown. ### Draft recommendation and governance feedback - Draft recommendation by the task team: - The task team recommends Option C5 (Maintain the status quo with a recommended “of which” analytical breakdown for Indigenous governments). - Rationale: preserves current GFSM sectorization framework and comparability of existing general government subsectors, while providing a practical mechanism to enhance visibility of Indigenous governments where relevant and feasible. Subsector classification continues to follow existing GFSM principles; the “of which” line is a supplementary analytical presentation. - Preliminary Views of GFSAC: - An earlier version of the Discussion Note was discussed by the GFSAC in May 2026. - GFSAC members broadly supported recommendations on Issues A and B, but expressed differing views on sectorization under Issue C. - Members requested clearer SNA references, a more precise definition of Indigenous governments, and further discussion of the sectorization options, including an “of which” presentation; these requests are reflected in the updated Discussion Note. ### Consultation questions posed for global input - Which option do you prefer (Option A1; Option A2)? Please explain the reason for the option selected and provide any other additional comments, including any alternative options you would like to propose. - Do the proposed indicators adequately capture the defining features of Indigenous governments? - Which option do you prefer (Option B1; Option B2)? Please explain the reason for the option selected and provide any other additional comments, including any alternative options you would like to propose. - Which option do you prefer (Option C1; Option C2; Option C3; Option C4; Option C5)? Please explain the reason for the option selected and provide any other additional comments, including any alternative options you would like to propose. - Are there additional criteria or considerations relevant for statistical classification of Indigenous governments? - Are you aware of potential risks or concerns associated with statistical recognition of Indigenous governments? ### Illustrative country experience (annex highlights) - Annex purpose: - Material is illustrative to support understanding of diversity of institutional arrangements involving Indigenous organizations; not definitive classifications and further country‑specific analysis would be required. - South Africa example (Annex 1) - Constitutional framework: - Chapter 12 of the South African Constitution addresses traditional leaders; it contains two components: Recognition and role of traditional leaders. - Recognition (constitutional points): 1. The institution, status and role of traditional leadership, according to customary law, are recognized, subject to the Constitution. 2. A traditional authority that observes a system of customary law may function subject to any applicable legislation and customs, which includes amendments to, or repeal of, that legislation or those customs. 3. The courts must apply customary law when that law is applicable, subject to the Constitution and any legislation that specifically deals with customary law. - Role of traditional leaders (constitutional points): 1. National legislation may provide for a role for traditional leadership as an institution at local level on matters affecting local communities. 2. To deal with matters relating to traditional leadership, the role of traditional leaders, customary law and the customs of communities observing a system of customary law: a) national or provincial legislation may provide for the establishment of houses of traditional leaders; and b) national legislation may establish a council of traditional leaders. - Functional and fiscal aspects: - Obligation to fund service and development lies primarily with municipalities, working with national and provincial spheres of government; traditional leaders play roles in development, custodianship, implementation of customary norms, dispute resolution. - Traditional authorities may be allocated funds for maintenance of properties, personnel, and infrastructure; other institutions and government departments may assist funding on an agency basis. - Zulu king illustrative example (summary of resources and uses): - Operating budget: The king receives a substantial annual budget to cover operating expenses, including maintenance of palaces and infrastructure. - Annual annuity: An annual sum is also allocated to the king for personal use. - Land properties: The king owns vast tracts of land, managed by a trust of which he is the sole administrator, generating potential income. - Real estate properties: The king owns properties from which he can collect rent. - Influence and support: Considered a guarantor of social peace and supports community development. - Examples of expenses: maintenance of palaces and infrastructure; funding for community development initiatives; support for cultural and traditional activities. - Implication: As an entity recognized by law and receiving public funds, inclusion in GFS is important; questions remain on subsector placement and availability of financial statements. *Source: GFSM 2014 Update Consultation: July 2026* ### 2. Canada ### 2. Canada ### Definition and constitutional recognition - "Indigenous peoples" is defined as a collective name for the original peoples of North America and their descendants. - The Canadian Constitution recognizes three groups of Indigenous peoples: - First Nations - Inuit - Métis - These are described as three distinct peoples with unique histories, languages, cultural practices and spiritual beliefs. ### First Nations — governance framework - Indigenous Services Canada supports First Nations and Inuit communities in the implementation of strong, effective and sustainable governments. - Canada recognizes that Indigenous peoples have an inherent right of self-government guaranteed in section 35 of the Constitution Act, 1982. - The Government of Canada's Approach to Implementation of the Inherent Right and the Negotiation of Aboriginal Self-Government was first launched in 1995 to guide self-government negotiations with Indigenous communities. - Negotiated agreements transfer decision-making power to Indigenous governments, enabling them to: - protect culture and language; - educate their students; - manage their own lands; - develop business partnerships that create jobs and other benefits for their citizens. - Negotiations produce multiple models of self-government reflecting different historical, cultural, political and economic circumstances. - Examples: - Inuit land claim agreements have been signed in all four Inuit regions; Inuit communities pursue self-determination under these agreements and through ongoing self-government negotiations. - The Métis are actively pursuing their own vision of self-determination through engagement with citizens and Recognition of Rights and Self-Determination discussion tables with Canada. - Self-government is framed as part of the foundation for a renewed relationship and a pathway to development and economic growth that generates benefits for Indigenous peoples. ### The Indian Act versus self-government - Unless they have negotiated self-government, most First Nations are currently governed by the Indian Act. - First Nations elect chiefs and councils under the Indian Act to make decisions and pass by-laws in a limited number of areas. - First Nations have been living under the Indian Act for over 140 years. - The Indian Act establishes a limited form of local administration that does not account for specific circumstances of individual communities. - Under self-government, First Nations: - move out from under the Indian Act; - can make their own laws and policies and have decision-making power in a broad range of matters, including those internal to their communities and integral to their cultures and traditions. ### How negotiated self-government works — common features - Negotiated agreements can set out law-making authority across areas including governance, social and economic development, education, health, lands and more; scope varies by group. - Common elements across agreements: a) No self-government agreement is possible without the approval of the Indigenous people through a community vote; b) Self-government is negotiated within the Canadian constitutional framework and federal legislation is passed before the negotiated agreement takes effect; c) Under self-government, Indigenous laws operate in harmony with federal and provincial laws; Indigenous laws protecting culture and language generally take priority if there is a conflict among laws; d) The Canadian Charter of Rights and Freedoms, the Canadian Human Rights Act and other general laws such as the Criminal Code continue to apply; e) Community members and non-member residents on Indigenous lands will have input into decisions that directly affect them. ### Self-government agreements — scale and forms - There are 25 self-government agreements across Canada involving 43 Indigenous communities. - There are also two education agreements involving 35 Indigenous communities. - Different forms of governance have been negotiated: - Example: Nunavut Agreement (a modern treaty / comprehensive land claim agreement) expresses Inuit self-government through public government; the Nunavut government represents all people residing in its territory. - Other forms limit law-making power to one or two key areas (e.g., Education Agreement in Nova Scotia; Anishinabek Nation Education Agreement in Ontario). ### Funding and fiscal arrangements for self-government - The Government of Canada is committed to renewing the fiscal relationship with Indigenous peoples based on respect, co-operation and partnership. - Canada is working with self-governing Indigenous governments to co-develop fiscal policy approaches to support self-government; these co-developed approaches form Canada's collaborative self-government fiscal policy. - Characteristics of the collaborative self-government fiscal policy: a) Only applies to Indigenous groups with self-government arrangements; b) Replaces, and takes precedence over other existing federal policies for groups to which it applies. - Fiscal arrangements developed under this policy are sometimes called: - Financial transfer agreement - Fiscal financing agreement - Fiscal relationship agreement - Fiscal arrangements: - Detail the ongoing funding relationship between the Indigenous government, Canada and, where applicable, provincial or territorial governments; - Provide funding that supports operations of the Indigenous government to deliver programs and services to its members on an ongoing basis; - These fiscal agreements generally have a 5-year term. ### First Nations operating under the Indian Act — parallel fiscal renewal - In addition to collaborative work on the self-government fiscal policy, the Government of Canada has engaged since 2016 in collaborative processes to renew fiscal relationships with First Nations operating under the Indian Act. - This separate process is coordinated by Indigenous Services Canada and the Assembly of First Nations with the support of Indigenous-led governance organizations. *Source: Indigenous Services Canada / Government of Canada (text on Indigenous self-government and fiscal arrangements).* ### 6. Nicaragua ### 6. Nicaragua ### Constitutional recognition and autonomy framework - The 1987 Political Constitution acknowledges the multicultural and multiethnic character of the nation and includes a dedicated chapter on the rights of the communities of the Atlantic Coast (Title IX, chapter II, articles 180-181). - The constitutional framework establishes the institutional basis for the formal recognition of multiple levels of Indigenous authority. - Law No. 28/2016, the Statute of Autonomy of the Regions of the Caribbean Coast, operationalizes the constitutional framework by: - Establishing the North Caribbean Coast Autonomous Region and the South Caribbean Coast Autonomous Region. - Defining a region as a territorial unit that encompasses multiple Indigenous territories, and a territory as a large area composed of several communities and complementary areas that may not belong to any single community. - Allowing the establishment of regional taxes in accordance with national legislation. - Defining Autonomous Regions as public-law legal entities (Article 8 of Law No. 28) and assigning them broad responsibilities, including participation in the formulation and implementation of national development plans, administration of public programs (including health and education), promotion of economic, social, and cultural projects, and a role in the management of natural resources. ### Regional and local authorities - Law No. 28/2016 establishes regional and local forms of authority, including: - The Regional Council. - The Regional Coordinator. - Municipal authorities. - Communal authorities. - Each Autonomous Region is subdivided into municipalities organized in accordance with communal traditions. ### Communal property regime and territorial authorities - Law No. 445/2003, on the Communal Property Regime, recognizes collective ownership rights over ancestral lands and establishes procedures for the demarcation and titling of Indigenous territories. - Lands recognized under Law No. 445/2003 are held under communal ownership and are not freely alienable under private law. - At the community level: - The communal assembly elects communal authorities. - Communal authorities collectively form the territorial assembly, which then elects the territorial authorities. - Community and territorial organizations typically designate two principal authorities: - The wihta (communal judge), responsible for social control and justice. - The síndico, responsible for the administration of land and natural resources. - In Nicaragua’s Indigenous communities, these authorities are typically elected. - Both the síndico and the wihta may participate in decisions related to land and resource use within the community, including authorizations for the establishment of new agricultural areas or access to timber. ### Comparative context within other country experiences - Several other countries formally recognize Indigenous communities as a distinct level of governance and incorporate their authority into national constitutions to allow for self-determination and autonomous rule. - Notable examples cited include Bolivia, Ecuador, Nicaragua, and Greenland (via Denmark), which provide significant self-government powers ranging from legislative, executive, and judicial authority to territorial autonomy and control over customary laws. - Specific approaches highlighted: - Mexico: a “broader autonomy” approach that affirms recognition shaped through mutual understanding and agreement between the state and Indigenous Peoples, including formal recognition as a fourth level of government. - Bolivia (2009) and Ecuador (2008): constitutions strongly recognizing the right of Indigenous peoples to self-determination and self-government. - Greenland (Denmark, 2009): the Act on Greenland Self-Government grants legislative, executive, and judicial powers to the Greenlandic people. - Norway, Sweden, Finland: utilize Saami Parliaments to grant a level of self-governance. - These arrangements often include recognition of traditional land rights, customary laws, and in some cases the right to manage natural resources within autonomous territories. --- _Source: https://www.imf.org/-/media/files/data/statistics/gfsm/global-consultations/gfsm-discussion-note-23-indigenous-governments.pdf_